In Defense of Progressive Taxes

Tuesday, February 03, 2004


What Makes More Sense: Flat Taxes or Redistribution of Wealth?


Disputations asked about the fairness of my distributive or progressive tax schemes in terms of social justice. The idea is to tax the rich higher percentages than the poor.

In an unrelated blog posting, Steve Bogner even went so far as to threw a bunch of figures together to show in graphic terms that the Bush tax cuts are a larger percent for the poor than they are for the rich.

I did some google searches to dicover what current tax percentages for each class are today, and found a helpful chart on the bottom of this article: Moving Toward a Flat Tax. I then went to the CIA figures on U.S. population, which is listed at 290,342,554. Combining the data, I present below three tables combined into one using frontpage editor. I hope this works (never tried this type of coding before). I also hope it is clear enough. If it's not clear, I hope you can get enough of the idea to try using the table in the article link to create an Excel sheet yourself, and see if your don't get similar results.

The top table indicates Bush's 2001 tax in each income bracket according to the article. I then project the amount of revenue generated in each class based on the population size and average income for each group, displaying each groups average tax per person as part of the calculation. The final number below each set of quintiles represents a total.

In the middle portion of the table, I calculate what a flat tax would look like to generate as close to the same revenue as Bush without going under Bush's budgeted revenue. The closest I could come was a 33.09% tax, which really socks it to the poor if we are to keep current services. I show just how much each group changes per person and as a group. Again, I total the sum and compare it to what Bush would bring in.

We can see this is grossly unfair to the poor, and may actually cause people to go without basic necessities. If I did this right (I'm no economist), it should decisively shut down any notion of a "flat tax".

Then, in the lower portion, I show what it would like if I were aiming for Bush's estimated revenue by increasing the top quintile 2 points each over the surrent Bush numbers, and decreasing the bottom four quintiles by the same 2 points from Bush's current plan (I'm giving more back to the middle class than Bush, and if I did my math correctly, it does work, and even brings in a little more revenue than Bush).

Since the wealthy become wealthy on the backs of the poor, I would argue this is the general direction we should be headed. I presented Disputations arguments for the ethics of this that can be summarized in paragraphs 1938 and 1947 of the CCC.

I hope all this makes sense. Try plugging the numbers in Excel or Lotus, and play with them yourself (maybe I made a mistake - I'm not an economist, and don't claim to be a math wiz):

Total Population290,342,554Average income2001 Tax with Bush cutsPer person avg Taxnumber of people in groupaverage revenue
Quintile 1Top 1 Percent$1,028,00041.70%$428,6762,903,426$1,244,628,846,785
Quintile 1Next 4 Percent$204,00035.80%$73,03211,613,702$848,171,896,149
Quintile 1Next 15 Percent$96,20034.70%$33,381
Quintile 2$56,10031.90%$17,89658,068,511$1,039,188,262,426
Quintile 3$34,30028.50%$9,77658,068,511$567,648,727,325
Quintile 4$20,70024.20%$5,00958,068,511$290,888,398,002
Bottom Quintile$9,40019.40%$1,82458,068,511$105,893,736,295
Total Population290,342,554Average incomeFlat TaxPer person avgnumber of peopleaverage revenue
Quintile 1Top 1 Percent$1,028,00033.56%$344,9972,903,426$1,001,672,520,338
Quintile 1Next 4 Percent$204,00033.56%$68,46211,613,702$795,101,922,759
Quintile 1Next 15 Percent$96,20033.56%$32,28543,551,383$1,406,044,208,996
Quintile 2$56,10033.56%$18,82758,068,511$1,093,265,143,793
Quintile 3$34,30033.56%$11,51158,068,511$668,431,273,300
Quintile 4$20,70033.56%$6,94758,068,511$403,397,299,047
Bottom Quintile$9,40033.56%$3,15558,068,511$183,185,246,910
Tax differenceTop 1 Percentdecrease-20%-$83,679 -$242,956,326,447
Next 4 Percentdecrease-6%-$4,570 -$53,069,973,390
Next 15 Percentdecrease-3%-$1,097 -$47,761,930,818
Quintile 2increase5%$931 $54,076,881,368
Quintile 3increase18%$1,736 $100,782,545,974
Quintile 4increase39%$1,938 $112,508,901,045
Bottom Quintileincrease73%$1,331 $77,291,510,615
Total Population290,342,554Average incomeJcecil3 TaxPer person avgnumber of peopleaverage revenue
Quintile 1Top 1 Percent$1,028,00043.70%$449,2362,903,426$1,304,323,275,887
Quintile 1Next 4 Percent$204,00037.80%$77,11211,613,702$895,555,800,962
Quintile 1Next 15 Percent$96,20036.70%$35,30543,551,383$1,537,599,000,899
Quintile 2$56,10029.90%$16,77458,068,511$974,035,393,308
Quintile 3$34,30026.50%$9,09058,068,511$527,813,728,917
Quintile 4$20,70022.20%$4,59558,068,511$266,848,034,530
Bottom Quintile$9,40017.40%$1,63658,068,511$94,976,856,264
Tax differenceTop 1 Percentincrease5%$20,560 $59,694,429,102
Next 4 Percentincrease6%$4,080 $47,383,904,813
Next 15 Percentincrease6%$1,924 $83,792,861,084
Quintile 2decrease-6%-$1,122 -$65,152,869,118
Quintile 3decrease-7%-$686 -$39,834,998,409
Quintile 4decrease-8%-$414 -$24,040,363,471
Bottom Quintiledecrease-10%-$188 -$10,916,880,030

Peace and blessings!


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posted by Jcecil3 1:53 PM

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